Roaring 20s again enabled by coalescing of various enabling systems creating the ideal conditions. Electromechanical systems, Systems on a Chip (SoC), Software.
Internet, Internet of Things, Industrial Internet, Embedded Systems, Sensors.Robotics, 3D Printing, Artificial Intelligence, Free Renewable Energy! The new Robber Barons. Capital Exuberance. End of another major war. Currency war that is. Still playing out...Should be done by early 2020s.
What happened in 1920s?
Few very distinct enabling systems two centuries in the making all coalesced
together to create a perfect storm of ideal conditions to deliver a massive boom.
Mass manufacturing enabled by abundant energy - steam, coal, electricity.
Communication systems enabled by Printing, Telegraph, Telephone.
Supply chain systems enabled by massive railroad construction.
Distribution systems enabled by mega cities with captive mass consumers.
Oil, Auto & Infrastructure due to Capital markets and Capitalists like John D.
Rockefeller, Andrew Carnegie, Cornelius Vanderbilt, J.P. Morgan, Henry Ford
It is happening again & They are back!
The coalescing of various enabling systems creating the ideal conditions.
What are they?
Electromechanical systems, Systems on a Chip (SoC), Software.
Internet, Internet of Things, Industrial Internet, Embedded Systems, Sensors.
Robotics, 3D Printing, Artificial Intelligence, Free Renewable Energy!
The new Robber Barons. Capital Exuberance. End of another major war.
Currency war that is. Still playing out...Should be done by early 2020s.
I think it is structural. Here is why:
The explosive growth in equity values starting in 1995 started off as irrational
exuberance as mentioned by Alan Greenspan and Robert Shiller in his book.
The markets just got ahead of themselves and corrected. They always do.
If you were to ignore those massive oscillations and just follow the S&P 500
trendline from 1950 to 1995, the structural shift becomes obvious.
Market gyrations made possible by the very technology that is driving the boom.
Yes, there is massive debt in the system. After all, the global savings glut needs an
investment vehicle. So there it is. Nicely packaged i.e. securitized.
A topic for another presentation along with currency wars mentioned before.
So how long can this continue? Who are the players?
Well into the 2020s and beyond possibly…This next one will be bigger than the
late 1990s and started in 2010. Most likely a 20 year cycle 2010-2030. Hence 2020s
Due to trends mentioned in slide 3. Capitalizing are firms like:
Tesla Motors positioning in EV & Energy space. Google’s new holding structure
Alphabet. Amazon AWS, IoT, Retail disruption. Facebook is now Madison Avenue.
GE? Yes! Suddenly the industrials realized they too are tech companies. GE
appears to be making the right moves with Predix, IIoT, GE Digital, divestitures.
Blackberry? Yes! Re-positioned from products to services. Like Dell & IBM.
Apple? Not clear what Apple’s strategy is. Which is why the valuation is low.
Incumbents vs Challengers. Who has an edge?
We are about to see a massive upheaval and dislocation in the various markets.
Retail disruption is well underway with Amazon and more recently new entrants
in India like Snapdeal, Flipkart etc and Alibaba in China.
The entire industrial space will see this sort of disruption in the next couple of
decades most likely. Mass manufacturing might be a casualty.
Healthcare service delivery and care methodology with Genomics will most likely
lead to consumer driven, led and empowered systems. Hospitals could be at risk.
Financial sector could see trading, debt markets and consumer lending evolve
that does not need the current business models with high fixed costs.
There will be blood...A lot of it.
Incumbents that are making the right moves and positioning themselves
correctly have an advantage in the short term.
Unfortunately, their achilles heel is high fixed costs.
The challengers are able to innovate fast and fail fast. The pace, or rate of change
of this phenomenon is accelerating dramatically due to digitization even in
industrial space. Digital Twin for physical machines in GE’s Predix!
Distributed systems that allows independent workers to collaborate without that
massive overhead will make it hard for incumbents to compete in the long run.
Platforms are US...
The platform providers are the new Standard Oils.
Several Trillion dollar valuations likely in the 2020s due to consolidation via
acquisitions or just plain market exit and share grab by last men standing.
Which is the reason for Tesla open sourcing its EV patents. They want to create a
platform at the intersection of EV and energy space.
Google's re-0rganization into a holding company after several acquisitions in
artificial intelligence, robotics, energy etc.
The market for number of smaller firms will most likely disappear.
The Original Dow Jones...Only 1 left.
So what sort of disruption are we talking about here?
In a 100 years only 1 of the 12 is left standing.
In the next 20, don’t be surprised if the S&P 500 is only S&P 50! Rate of change
acceleration. 7000+ publicly listed firms in 1996 are now down to 3700!!
However, the market cap of the entire market could be 100x! Hence the trillion
dollar market caps and the new standard oils. We will need a new Sherman Anti
trust law to tackle this…
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